Futures are priced for a gap up into Wednesday over at the NASDAQ 100 after an overnight session featuring normal range and volume. Price spent most of the session drifting higher and managed to take out the Tuesday high and continue up through the Monday midpoint before stalling out on the top-end of current value. At 7am MBA Mortgage Applications came out slightly lower than expected, there was a muted response.

There are no other economic events scheduled for today.

Yesterday we printed a normal variation up day. Price opened gap down and made a liquidation thrust lower that responsive buyers quickly gobbled up. One more attempt lower was made just before 10:30am which managed to print an excess low. After setting the low we grinded sideways above the mid before one last sell program tested for interest below the mid. It was faded and we rallied into the close.

Heading into today my primary expectation is for sellers to work into the overnight inventory but to stall before closing the overnight gap. Look for responsive buyers to defend 4648.75 and make a move to take out overnight high 4661.75. Just above here look for responsive selling and two-way trade to ensue.

Hypo 2 sellers push a full gap fill down to 4643 before two way trade ensues. Look for sellers to keep price below overnight high 4661.75 and to make a move to take out overnight low 4636.25. Look for signs of responsive buying around 4622.75 and two way trade ensues.

Hypo 3 is a pole climb. Up above overnight high 4661.75 is a thin profile structure. If buyers make a strong push above overnight high, then it is likely to continue all the way up to 4683.50 before finding responsive sellers.

Levels:

Prices over at the NASDADQ exchange are down near the Monday low after an overnight session that featured an elevated range on normal volume. The price action was nearly contained within the lower half of the range established Monday.

The economic calendar is slow today. We have Wholesale Inventories at 10am.

Yesterday we printed what can be best described as a double distribution trend day down. The week started with a gap down. A tight compression formed off the open which broke to the downside and triggered a fast, liquidation move lower. By lunchtime responsive buyers stepped in, and after about 3 hours of balance near the lows we saw a late-day rally.

Heading into today my primary expectation is for buyers to work into the overnight inventory and push price up. Look for buyers to stall out before the open gap up at 4652.25. Look for responsive sellers (responsive relative to the open, initiative relative to yesterday close) around 4645.50 who target the overnight low 4624.50. Below here price action is thin. Look for buyers around the 4600 mark then two way trade ensues.

Hypo 2 buyers push into the overnight inventory and close the gap up to 4652.25 before sellers step in and work price down through overnight low 4624.50. A test below ONL/Monday low 4622 reveals responsive buyers and two way trade ensues south of 4655.

Hypo 3 strong buying closes overnight gap 4652.25 then sets its sights on overnight high 4662.25. Trade is sustained above ONH 4652.25 setting up a pole climb up to 4692 before two-way trade ensues.

Levels:

Sellers are out in front this week after extending their overnight progress lower. We have already exceeded my weakest hypothesis for the session and show no signs of responsive buying.  The Monday gap being a fade data is being overrun as are early dip buyers.

Breadth is low, all sectors are in the red, and so far the tech darlings are not holding their morning bid.  The earnings gap down in Priceline is being sold.

Is speed coming back into the market? Or is this just an attempt to force your hand? I booked a few losses to raise some cash.

NASDAQ futures are priced to start the week out with price gap down. The overnight session featured slightly elevated range on normal volume. Price managed to push above the Friday high and sustain trade above it for long enough to form a weak high. Then around midnight sellers stepped in and worked price back down to the Friday mid.

The economic calendar is light this week as we wrap up earnings season. At 10am we have Labor Market Conditions Index Change and at 12pm MBA Mortgage Foreclosures.

Last week started with a trend day up which saw follow through Tuesday. On Wednesday price opened gap up, went to new contract high briefly (failed auction) before reversing. The rest of the week was a churn with slight downward pressure as sellers emerged.

Friday morning price accelerated to the downside but quickly reversed forming an excess low. Then late in the afternoon a small rally took hold into the weekend.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4702.50. From there look for buyers to set their target on the (weak) overnight high 4712.75. Look for responsive sellers just above overnight high and two way trade to ensue north of 4692.

Hypo 2 buyers have a hard time closing the overnight gap and instead stall out around 4700. Price heads down and takes out overnight low 4683.50. Look for responsive buyers just below around 4681.50 then two way trade to ensue which eventually closes the gap up to 4702.50.

Hypo 3 once buyers take out overnight high 4712.75 they set their sights on a pole climb to test above last Thursday high 4726.50. Look for buyers to press for new contract high then look for responsive sellers at measured move levels 4732 then 4734.50.

Hypo 4 sellers gap-and-go down, take out overnight low 4683.50 early and sustain trade below 4680 setting up a liquidation down to test below Friday low 4658.75. Look for responsive sellers down at 4656.50.

Levels:

After a flash of buying to shake up the overnight inventory, sellers came in and rejected buyers.  Now we are potentially heading into the liquidation scenario (primary hypo).  Top short trade idea, BIS.

Or, we just take out overnight low then all speed vanishes and we settle into balance.  But be aware that the structure below could facilitate a fast move.

NASDAQ futures are heading lower as we approach cash open. The overnight session features elevated range and volume. Action was balanced with an upward skew until a robust Nonfarm payroll report was released at 8:30am. Price was contained mostly to the lower half of Thursday range before briefly exceeding the session low.

Also on the docket today we have the Baker Hughes rig count at 1pm and Consumer Credit at 3pm.

Yesterday we printed a normal variation down. We opened gap up, went down and closed the gap and found buyers who were then overrun by a big wave of selling. The action pushed range extension down briefly before rallying back to the midpoint. From there sellers were seen defending before we ultimately came into balance.

Heading into today my primary expectation is for sellers to push down though overnight low 4672.50 to set up liquidation down to 4656.50. From there look for two way trade to ensues.

Hypo 2 buyers pus into the overnight inventory and close the gap up to 4696.50 before sellers come in and work down through overnight low 4672.50. Buyers are found not far below and two way trade ensues.

Hypo 3 buyers are strong, press the gap closed then set targets on overnight high 4708.75 before balancing into Friday grind-balance trade.

Levels:

Third reaction analysis of the NFP data is yielding a sell signal.  The action may make for an interesting open to Friday’s trade.

Price is currently flat.

Working off a triple intraday confluence level, I managed to scrape some gains out of the NASDAQARI.

For the first time this week, my robots picked up on some algorithmic sell programs hitting the tape. This allowed me to keep building into the short and scaling along the way. Here’s the triple intraday, for all you renko chart nerds:

It had confluence with the VAL of the zone we lurched out of earlier as well. Overall it turned out to be a solid afternoon sesh and the second day where my good friend the NAS100 was offering pay stipends.

It was a slow trade though. This tape is quite healthy from my perspective. Speed is still absent. It made the entire endeavor a bit exhausting.  I suppose I will draw a nap before I show some gents Exodus.

PS – DEATH TO BIOTECH

NASDAQ futures are up a touch heading into Thursday trade. The overnight session featured a normal range and volume on price action that was contained inside the prior day range. Price was churning around the Wednesday MID before pressing higher around the time European markets opened. At 8:30am Initial/Continuing jobless claims came in worse than expected, a high read, and the initial reaction is mute.

The economic calendar is otherwise quiet. Energy traders are likely paying close attention to the 10:30am Natural Gas storage read since unseasonably warm weather has gripped the Midwest.

Yesterday we printed a normal variation down. Price opened gap up and quickly went down to close the opening. Initially buyers were responsive at this level but were overrun later in the morning as sellers pressed down into the volume pocket. Just on the other side, and right at our prior value, responsive buyers again emerged and price closed out near the mid.

Heading into today my primary expectation (blue) is for sellers to push down into the overnight inventory and close the gap down to 4710. From there look for price to continue a bit lower but find responsive buyers ahead of overnight low 4700.25. Then two way trade ensues with buyers working at taking out overnight high 4727.50. Stretch targets are 4732 and 4734.50.

Hypo 2 (orange) sellers push down through overnight low 4700.25 and explore the lower region of our current value. Look for responsive buyers to defend north of 4695 and two way trade to ensue around the 4710 mark.

Hypo 3 (green) buyers push off the open, take out overnight high 4727.50 early on and go test up to 4732 before finding sellers and two way trade ensues around 4720.

Hypo 4 we break balance up. Buyers are strong, sustain trade above 4734.50 setting up another leg higher and continued exploration of higher prices.

Hypo 5 break balance down, sellers break back into the lower value area and go test VAL at 4684.75.

Levels:

I have been experimenting with adding a few layers to my breadth analysis.  The beautiful trait of index futures is you have lots of visibility into the underlying elements driving direction (during regular trading hours).  There are three indispensable breadth measurements to use when trading index futures.

For the overall equity complex, you cannot beat Exodus market breadth.  It is comprehensive and indicative of overall directional conviction during the day.  It tracks over 4000 stocks, bravo.  Today we are a tad below 40% so not exactly confirming the selling.

Next I use The NASDSAQ Net Issues.  One of the things I love about trading NASDAQ futures is it tracks 100 underlying components.  That means the index’s respective TICK and NET ISSUE are easier to make sense of.  Net Issue is making a new low on the session as we head into afternoon trade–supporting the down day.

Finally, and indispensable, is the ‘free money’ trade.  This is a concept Josh Brown introduced us to during the conference.  The idea is based on the assumption that only a few of the exciting tech companies can be trusted and therefore trade with impunity.  He did not give specifics, but it doesn’t take a hound sleuth to connect the dots.  I always track the intra-day performance of Amazon, Alphabet, Facebook, and Netflix.  When they were rallying this morning, I knew better than to press shorts on the /NQ.  Priceless.  But now heading into the afternoon they are fading, interesting.

If you are getting up to speed with index trading, it behooves you to develop a feel for these breadth measurements.  They are indispensable context as your navigate the field.

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